The hottest topic in B2B marketing today: lead generation VS demand generation. In this blog you will learn why it’s such a big deal, and what strategy will increase marketing’s contribution to qualified pipeline & revenue.
In B2B marketing, we have been taught that there is a linear customer journey from awareness to consideration to purchase. The world has proven to be much more complicated than this. In fact, most customer journeys don’t even resemble a funnel at all. Some journeys are diamond shaped, or they resemble hourglasses, loops, or even micro-moments. We created an internal ecosystem where marketing captures leads and qualifies them based on behavior. This behavior can be a whitepaper download, attending a webinar or clicking on an ad. Multiple touchpoints push a lead over the Marketing Qualified Lead (MQL) threshold, qualifying the lead for xDR follow-up. Marketing gets credits and ownership of the lead moves from marketing to the xDR team. Some companies added extra color to MQLs by scoring demographics, technographics or firmographics as well. This way, a lead from a large, well funded enterprise nearby could be prioritized over a lead from a small company on the other side of the world. Over the years, sales and xDR organizations have grown accustomed to be served MQLs at scale. Depending on the source, 30-50% of all MQLs convert into an opportunity and contribute to the marketing generated pipeline. Lead metrics allowed us to track the marketing funnel and pipeline conversion. We then looked at movement every week in order to prove the yield of our spent marketing budget. This all sounds logical and useful, right?
Wrong.
Anyone can qualify as a lead when they download a few whitepapers. If someone is engaging with your content because of a curiosity about the category you are creating, this interest won’t necessarily convert into revenue. It frustrates xDR & sales teams that budget and effort are put towards engaging with prospects that will not buy. In an attempt to solve for a short term pipeline gap, marketers are then asked to bring in a larger lead volume. When quantity is more important than quality, a vicious cycle is created that brings more and more lead generating tactics to the field, all with diminishing returns. Even more alarming: as the pressure on marketing builds, and results fall behind, the trust between departments suffers. It is at exactly this point where the lead generation strategy breaks.
No more MQLs.
The biggest troublemaker is the MQL. Let’s be honest, sales doesn’t care about leads, they care about opportunities. So let today be the day that we stop looking at MQLs on a weekly basis. It’s a grind that does not inspire marketeers to work on their charter that actually contributes to growth: uncovering changing buyer behaviors, providing direction on how to meet and attract new customers, support customer retention. In other words: demand generation.
Introducing a new way of managing the revenue funnel goes beyond the jurisdiction of marketing alone, or sales for that matter. This makes the demand generation strategy an executive priority, not a functional or regional initiative.
The revenue organization operating model will require a redesign. Teams will need to be compensated differently. Change management is essential and leadership will have to play a prominent role. Resistance can be expected. Sales & xDR teams will combat any new strategy that provides significantly less MQLs. And marketing is required to work with sales to develop buyer personas, journey maps, and a consistent brand identity.
Facilitating this change can be a regular meeting cadence with all revenue team leaders where, instead of tracking MQLs, we now pursue actionable learnings from closing percentages, funnel conversion rates and cost per acquisition. This data driven approach can work miracles to encourages all teams to collaborate towards the same goals. The outcome of such meetings can also be used to guide functional and regional teams. They can start growth loops where data informs campaign targeting, content calendars and channel selections.
Success of this all hinges on the operations teams ability to navigate from ‘doing things right’ to being more effective and ‘do the right things’. Although alignment is crucial, it is up to marketing & revenue leadership to help operations navigate these uncharted waters.
The value of buyer intent
When your meetings go beyond traditional lead metrics, and you care to look at the entire customer life cycle end-to-end, today’s attribution tools just won’t cut it. Attribution can help uncover which department contributed to the pipeline, or what tactic worked. But it doesn’t answer which tactic is most profitable, how your target audience behaves offline or what external factors are influencing demand.
A solution lies in changing our perspective. If you look at your funnel by buyer intent, this will radically change your opinion of the value of a lead. Buyer intent is a cluster of behavioral signals used to identify potential buyers for your business. There are cool tools out there, like 6Sense & Lead Forensics, to help support this new perspective. Alignment on intent will come naturally for marketing, sales and xDR’s, simply because all teams are now focussed on the same thing: unlocking opportunities that contribute to revenue.
When people can count on brands, brands can count on growth
Revenue teams can start evolving their 2023 plan from chasing MQLs to demand creation by entering line items in their budget that support brand awareness & demand infrastructure next to lead generating tactics. Go hard on communities, organic social and free content like podcasts. Chris Hutchins (All the Hacks, Wealthfront, Google) breaks down the power of podcasts in Lenny’s podcast Launching and growing a podcast (1.17h): “There are 4 million podcasts, however, there are 150.000 podcasts that have had 10 episodes ánd have published in the last 10 days. […] If you just do an episode a week, for 10 weeks, you are now in the top 4% of all podcasts ever created.”
Now do the math for organic social media, community events, word-of-mouth, video’s – and imagine the impact.
For sure, with these tactics, marketing and sales will have to get used to not having instant gratification of mass lead harvests. Ultimately, this will pay out in increased brand recognition, brand loyalty, word-of-mouth, successful price negotiations. Without the MQL vanity metric, we are now left with a sustainable source of revenue. And I’ll take the added benefits like attracting talent and employee engagement as a bonus any day.
--- Jan van Zwet, Revenue Marketing Advisor With 15 years of B2B Marketing experience at high growth companies like Amplitude, Zscaler and Sigma Computing, Jan helps Revenue teams increase marketing’s contribution to qualified pipeline & revenue while lowering customer attribution costs. #inspire #attract #convert janvanzwet.com